Make Your Retirement Income Last Longer

With retirement getting closer, you’ll want to look for ways to stretch your retirement income. Look for ways to reduce your housing costs and increase savings. Also, pare down debt as much as possible.

By Jeanne Lee

You’ve penciled out where your retirement income will come from and roughly how much you’ll have. So what can you do to stretch that income and make it last longer? Three things, actually: spending less on housing, saving more, and paying off your debt.
A striking 63% of people in their late 50s and early 60s have mortgage and home-equity debt, up from 49% in 1989.
Spend less on housing
To reduce your spending in the years leading up to retirement, look for deep cuts in your housing costs.

Think about downsizing into a smaller house, condo, or rental apartment. By doing this, you’ll pare your utility bills and you might lower or eliminate your property taxes. If you’re still making mortgage payments, you’ll trim that cost too.

If you own a second home, ask yourself whether the place has outlived its usefulness. Selling it or renting it out could be a big boost to your retirement savings. Or you might relocate to this property, unloading your current residence and making the vacation home your new full-time home.

“If your family always gathered at that beach house, you might be hesitant to give it up — particularly if it has been paid off — but even then, it may still take $10,000 a year to keep up,” says Marcia Mantell, owner of Mantell Retirement Consulting, in Needham, Mass.
Save more
You’ve heard this advice before, but it bears repeating: As you near retirement, saving for this goal is more critical than ever. “From age 50 on, you need to super-save,” Mantell says.

Try to set aside 20% your income, if you can, and max out your retirement plan contributions. Remember, the catch-up provisions for IRAs and 401(k)s let people 50 and older contribute thousands more a year, tax-deferred, than younger people. You might need to save outside your retirement plans, too, in taxable accounts like a brokerage account.

Look for ways to lower your housing costs, so you can save more. Mortgage providers offer various accelerated payment programs that may reduce your total interest costs by thousands of dollars over the life of your loan. If interest rates have dropped, you might want to refinance to a lower monthly payment and put the found money into savings.
Pay down debt
Now’s the time to pare down your debts as much as possible, since you’ll likely have less steady income during retirement to pay them off. Unfortunately, cumbersome debt is a growing problem for people in their late 50s and early 60s.

More than 80% of pre-retirees aged 55 to 64 have some type of debt, including mortgages, credit cards, and credit lines, according to the Federal Reserve’s Survey of Consumer Finances. And a striking 63% of people in their late 50s and early 60s have mortgage and home-equity debt, up from 49% in 1989, according to Mark Miller, editor of

“If you’re in your 60s and owe $50,000, it could be costing you 10% of your monthly income just to service that debt,” Mantell says. You could put that money to better use.

Key Points:

  • Try to max out your retirement plan contributions, taking advantage of catch-up provisions.
  • Look for ways to lower your housing costs, so you can save more, including outside of your retirement plans.
  • Pare down your debts as much as possible.
Jeanne Lee is a business journalist whose work has appeared in Financial Planning, Fortune, Money, and on CBS

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